NEW YORK – Wells Fargo & Co., long criticized for its lending practices to less credit-worthy borrowers, has adopted safeguards that it said will ensure fairness for borrowers who do not qualify for the best rates.

The No. 2 U.S. mortgage lender this week changed its subprime mortgage lending practices "as part of our continuing efforts to respond to our customers' evolving needs," said Mark Oman, senior executive vice president for the bank's home and consumer finance group, in a statement.

Wells Fargo has long been targeted by fair lending advocates such as the Association of Community Organizations for Reform Now, or ACORN, which has conducted protests and filed lawsuits against it. Mortgage lending also is a subject of a closely watched federal lawsuit involving dozens of state regulators, including New York Attorney General Eliot Spitzer.

Among Wells Fargo's changes is a $1,500 maximum on origination fees for loans the bank makes directly. Prepayment penalties will be limited to the first three years of loans and not exceed 3 percent of the loan amount in the first year, 2 percent in the second year and 1 percent in the third year.

The bank also eliminated mandatory arbitration for disputes and said it will make certain that all customers who qualify for lower-cost "prime" loans will get them.

Maude Hurd, ACORN's president, said in an interview "We have long said Wells Fargo should stop targeting communities with abusive lending practices. The bank has taken a good step in adopting new practices, but we still wonder what it plans to do about compensating borrowers who have already been harmed."

Subprime borrowers often face higher interest rates, fees, penalties and documentation requirements because they are believed to carry a greater risk of default. But critics say lenders sometimes practice predatory lending, charging too much or steering customers into higher-cost, more onerous loans.

"Wells Fargo is firmly committed to helping the millions of Americans who . . . have not been able to qualify for traditional prime real estate loans," Oman said.

Wells Fargo is part of the 11-bank Clearing House Association, which is seeking in a federal lawsuit to stop state regulators from investigating whether big banks charge minority borrowers more to obtain mortgages.

Spitzer said he had sent letters to several banks seeking data in April, two months before the lawsuit was filed, and that Wells Fargo was the only bank to not cooperate.

Spitzer's office did not immediately return a call seeking comment. At least 35 state attorneys general have urged dismissal of the Clearing House's lawsuit.